The neighbouring rights sector looks to the future

The neighbouring rights sector looks to the future

Leading neighbouring rights executives have tipped the market to continue to grow despite the "short-to-medium term impact" of the coronavirus pandemic. 

The value of the NR sector, which was recently the subject of a Music Week's special report, has swelled exponentially from $1.4 billion (£1.1bn) at the start of the 2010s to $2.6bn (£2.1bn) last year, according to the IFPI. 

Hanna Grzeszczyk, co-founder and director of Media IP Rights, predicted the trend to continue.

"In the coming years, the global NR collection will increase, despite the disruption caused by the pandemic to the level of income collected from public performance - shops, restaurants, hotels," she said. "New rights under NR are being introduced in several territories. There is a strong cooperation between several European collecting societies who actively lobby the national governments and the EU officials in trying to cover as many new ways of copyright usage to be included for protection especially for performers. The shift from traditional usage of music to new ways is evident and it is important that the collecting societies do address this without unnecessary delay."

However, Grzeszczyk warned there would be complications for UK artists and record labels as a result of the uncertainty caused by Brexit. 

"Due to the fact that certain rights are currently payable to British rights-holders based on EU directives, leaving the EU without the implementation of the relevant legislation into the UK copyright, will cause a significant drop of NR income for the UK rights-holders," she said. "While everyone is talking about the effect of Brexit on the live sector, no one from the top music bodies seems to raise the alarm and press the government on making sure that all these additional rights that exist under EU umbrella are fully transposed into the UK system. At the moment it looks that the UK will be left behind Europe and as a result UK rights-holders will not be compensated for number types of usage of the music." 

It may be a case of the survival of the fittest in the months and years ahead

Peter Leathem


Peter Leathem, CEO of PPL, which has a roster of tens of thousands of internationally mandated performers and recording rights-holders, told Music Week: "Before Covid-19, the long term trend for neighbouring rights was growth and we believe this is still the case, despite the pandemic and the short-to-medium term impact it will have on collections," he said. "This is because the number of countries that are establishing neighbouring rights continues to grow, collections in the countries that have rights have a lot of potential for future growth, the neighbouring rights community around the world is becoming more connected and collaborative, there is more joined up work on data quality, and there are significant efforts being made to introduce much-needed legislative changes.

"Overall, whilst we may see consolidation in some areas of the market, there are new entrants that will continue to bring a healthy competitiveness. It may be a case of the survival of the fittest in the months and years ahead."

Erik Veerman of Amsterdam-based Global Master Rights (GMR), whose clients include Spinnin’ Records, Cherry Red Records, Armin Van Buuren, Dmitri Vegas & Like Mike and Martin Garrix (pictured), said: "Revenues will be impacted to some degree by Covid-19 and the shutdowns that took place, but it’s difficult to assess at this stage. Much will depend on how the CMOs respond – perhaps some can unlock other revenue streams or cash reserves to temporarily support distributions.

"We’re working to open-up other markets to compensate; Asia, South America, etc. Technology will play an ever-increasing role in the neighbouring rights market in future."

Gino Olivieri, founding partner of Canadian royalties organisation Premier Muzik, agreed that technological improvements will aid the business in the years to come. 

"Once we get closer to a shared or similar way of working technologically and ethically, the smoother the process will be," he said. "We have developed a proprietary software tailored for Neighboring Rights that has resolved many of the issues we've encountered. In fact some societies were keen on using it as well alongside their own software. In our view, the more standardised the NR platform the quicker the artists and performers will receive their royalties."

Adrienne Willen, senior copyright controller from the royalties department at CC Young, which provides accounting and taxation services to the music industry, said: "I would like to see an increase in educating the performer on neighbouring rights management. It’s a daunting procedure which can only be simplified with the performer in mind."

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